w w w . L a w y e r S e r v i c e s . i n



Goran Pharma Pvt. Ltd V/S C.C.E. & S.T., Bhavnagar

    Appeal No. E/404/2010-DB (Arising out of order No. 59/2009(BVR)/HKJ/COMMR(A)/AHD dated 29.12.2009 passed by the commissioner/ commissioner (Appeal) of Customs/ Central Excise/Service Tax) and ORDER No. A/11139/ 2018

    Decided On, 05 June 2018

    At, Customs Excise Service Tax Appellate Tribunal West Zonal Bench At Ahmedabad

    By, THE HONORABLE JUSTICE: RAMESH NAIR
    By, MEMBER AND THE HONORABLE JUSTICE: RAJU
    By, MEMBER

    For Petitioner: Anand Mishra, Advocate And For Respondents: N. Satwani, AR



Judgment Text


1. This appeal is directed against order in appeal No. 59/2009 (DBR)HKJ/Commr.(A)/AHD. Dated 29.12.2009 passed by Commissioner (Appeal-IV), Central Excise, Ambavadi, Ahmedabad. Whereby the Ld. Commissioner (Appeals) upheld the order in original No. 08/C.Ex.-demand/09-10 dated 10.06.2009 and rejected the appeal filed by the appellant. The fact of the case are that the appellant are engaged in the manufacture of medicament falling under Chapter 30 and 33 of the Central Excise Tariff Act, 1985. On scrutiny of the ER-1 returns for the period from April, 2007 to December, 2007. It is noticed that the appellant has manufactured and cleared the product "Sentim Toothpaste" under Chapter 30 of the Central Excise Tariff Act, 1984 attracting Central Excise duty @8%, 2% of Education cess and 1% of the S.H.E. cess. The said product Sentim Sensitive Fluoride Toothpaste, according to the department, is classifiable under chapter 33 of Central Excise Tariff Act, 1985 and the same is not eligible to be classified as medicament under Chapter 30 of Central Excise Tariff Act, 1985 on the ground that as per the label of the said product as declared by the appellants and accepted by the Commissioner FDCA, Gujarat that the product is a toothpaste containing ingredients of Potassium Nitrate B.P., Sodium Fluoride dentrifrice base and Sodium Benzoate. But there was no mention in the product literature and label on the packing that the toothpaste is to be used only on the prescription of medical practitioner; that in the case of medicament which is prescribed for specific period in specific doses, but on the contrary, appellant recommends continuous use of the said product; that unlike other medicines, the label does not indicate the period of usage; that in terms of chapter note and chapter 30 of the Central Excise Tariff Act, 1985 the product cannot be classified under this chapter, even though they contain therapeutic or prophylactic properties. On this basis a show cause notice was issued which was culminated into adjudicating order wherein the goods namely "Sentim sensitive fluoride toothpaste", was held classifiable under Tariff Heading 3306 1020 instead of Chapter 30. Accordingly, differential duty was confirmed and interest was also demanded. Being aggrieved by the order in original, the appellant filed appeal before the Commissioner (appeals) who upheld the order in original and rejected the appeal. Therefore, the present appeal for our consideration.

2. Shri Anand Mishra, Ld. Counsel appearing on behalf of the appellant submits that the product of the appellant are essentially for prevention of decay of sensitive teeth and cavity protection. The observation in the order that Chemicals used in the toothpaste are of general use is devoid of any basis. There is no evidence on regard to substantiate this observation. On the label of the product, it is a mentioned tooth paste for sensitive tooth and cavity protection which does not classify that the tooth paste is essentially for dental hygiene. He submits that the dental cavity is a disease due to bacterial process which may harm tooth structure. For the treatment of such disease this toothpaste is recommended. Therefore, it is clearly used as a medicament. He submits that for the manufacture of the products in question, a drug licence from the Food and Drug controller is required for its manufacture. The products are sold from chemist shops and not from grocery. The package of the product contains all declarations as required under Drug and Cosmetics Act, 1940. The price of 100 gm pack of Sentim toothpaste is much higher than prices of any ordinary toothpaste which is sold from the grocery shop. The composition of the product is Potassium Nitrate B.P. and Sodium Fluoride. The Potassium nitrate confirms to the standards set out in British Pharma copia and sodium chloride standard set out in Indian Pharma copia. Accordingly, the product manufactured out of the drugs and meant for treating a diseases like as teeth decay is medicament and not ordinary toothpaste.

3. On the other hand, Ms. Nitina Nagori, Ld. AR appearing on behalf of the revenue reiterates the findings of the impugned order. We have carefully considered the submission made by parties and perused the records. We find that the product manufactured by the appellant is sold in the name of "Sentim Sensitive Fluoride toothpaste". The products are manufactured from the ingredients i.e. drug namely Potassium Nitrate B.P., Sodium Fluoride dentrifrice base and Sodium Benzoate. The product is not ordinarily sold as tooth paste like colgate, pepsodent, etc. but it is sold with a declaration on the product that it is used for treatment of tooth decay and cavity prevention for the sensitive teeth. Therefore, for the product in question, cannot be said that it is an ordinary tooth paste classifiable under chapter 33. The identical issue had come up before this Tribunal in the case of ICPA health product vs. the Commissioner of Central Excise Surat I and Baroda vide order no C II/2791-92/WZB/2001 dated 01.11.2001. In respect of product namely Thermoseal and RA Thermoseal, it was held that the said products are classifiable under Heading 3003. The relevant part of the order is reproduced as follows

"The Ld. Commissioner in his first observation above has held that unlike the other medicine the literature given does not indicate the period of usage. On record is the printed pamphlet on RA Thermoseal which advices brushing three daily for 15-20 days. Therefore, the Commissioner's observation that continuous use of this product was advised is not correct. The low abrasive effect of this paste is as per the literature on record. The fact that the toothpaste takes the effective function of curing is not material. The commissioner in paragraph 4 admits that the products have curative properties but on the basis of continuous use,

We have seen the packages. The legend packages very clearly states that both products are for dental sensitivity. At our instance, the Ld. counsel showed us the other tooth pastes sold in the market. We find that whereas the price for the contested products was Rs. 25 to Rs. 27, the other toothpaste of the same size and weight were selling at Rs. 13.50 to Rs. 8.8.

In a number of disputes, the classification of cosmetic medicaments have come up for discussion. In dealing with the classification of tooth powder in the case of Shree Baidyanath Ayurved Bhawan Ltd. vs. CCE, Nagpur : 1996 (83) EET 492 (S.C.), the Supreme Court observed that medicine was ordinarily prescribed by a medical practitioner and it was used for a limited time. In case of increased sensitivity of the dental, a person would ordinarily go to a dentist and who would prescribe a preparation to grant a measure of relief. The patient would then go and purchase it from the chemist.

In the case reported in : 1995 (77) E.L.T. 485 (S.C.- B.P.L. Pharmaceuticals Ltd. vs. CCE-Vadodara), the Supreme Court had made certain guidelines for distinction between medicines and cosmetics. The present appellant is the holder of a Drug Licence. The price of the contested products are substantially high than the general tooth pastes sold in general provision shops. The products such are contested before us are not ordinarily sold in general provision shops but are sold in chemists shops. The guidelines laid down by the Supreme Court in dealing with the issue of shampoo which contained medicaments would apply in its entirety to the present case. In view of the higher price, the restricted use generally on a prescription and the fact that a general merchant would not sold the contested product, the ratio of the judgment would apply to the contested products. In yet another case, the Division bench of the Calcutta High Court in the case of UOI vs. G.D. Pharmaceuticals Ltd : (1998 (100) E.L.T. 24 held that Boroline was medicament which contained boric acid and zinc oxide, in spite of the existence of substantial quantity of white petroleum jelly and lanoline anhydrous. The judgment was upheld by the Supreme Court in 1999 (108) 56.

Shri Jain laid much stress on the wording of the chapter note 2 of would continue to remain a cosmetic inspite of its containing subsidiary pharmaceutical or antiseptic constituent. What is subsidiary would depend upon its quantity and effect. A similar contention wa made in the cited judgment of BPL Pharma

Please Login To View The Full Judgment!

ceuticals Ltd. The Supreme Court observed that the selenium sulphide content which was the principal agent in the shampoo was not of subsidiary quantum but that it was of therapeutic preparations. In the present case, we find the entire paper referred to prepared by Japanese Dentist dealing with Strontium Chloride used on 10% of the disputed product. It cannot be said that the native agents viz Strontium Chloride and Potassium Nitrate were having a subsidiary function in the preparation. We thus find that the contested products merit classification under heading 3003. The appeals succeed and are allowed with consequential relief." 4. From the above judgment it is observed that the product is in questions are identical and marketed in the same manner. Therefore, the ratio of the above tribunal's order is directly applicable in the facts of the present case. Accordingly, we set aside the impugned order and allow the appeal.
O R